Knowledge that Transforms

Abstract The article presents a critique on measurement in current accounting practice. Although "measure," "measuring" and "measurement" occur frequently in expositions of accounting, there is little disciplined measurement in the processes of accounting practice. Current accounting practices have repeatedly been shown to have recourse to so many different quantification rules that a critical examination might be expected to clarify their nature, to show how to discriminate between measurements and other kinds of quantification, and to elucidate the nature of measurement in accounting. The author tries to know whether the amounts obtained by aggregating and taking differences between amounts of such diverse origin are measurements of income, total assets, net equity and so on. Measurement has never been limited to objective measurement in technical literature. Subjective probability measures, utility measures, and many other measures in economics, psychology, sociology, and other areas of social sciences are considerably subjective, yet they are treated as measurement.

Abstract Reviews the book "The Feasibility of a Five-Year Educational Requirement for New York CPAs," edited by Stephen Feldman and Joel Kauffman.

Abstract The article highlights the report of the Committee on Multi-Media Instruction in Accounting of the American Accounting Association. The charge to this committee is to study and prepare a report upon current and potential uses of various instructional media and systems in accounting education, including suggestions and recommendations relative to their use by accounting educators. The emphasis in the charge on uses of various instructional media and systems-- both current and potential--required the Committee to be concerned with ends as well as means. There are various predictions as to the result of the meeting of technology and education. On the basis of the limited responses, the Committee is hesitant to draw inferences on the use of programmed textbooks in the whole field of accounting education. In addition to learning theories, there are theories of communication which have consequence to the learning process. Several economic theories are pertinent to the learning, especially utility theory and information economics. Training methods in which the trainer is attempting to aid participants in their own efforts to understand group dynamics and to acquire interpersonal skills in various situations.

Abstract Reviews the book "Foundations of Accounting Theory," edited by Williard E. Stone.

Abstract The article informs that when a student is first introduced to the concepts of compound interest, the functional relationships between the different variables are often confusing. This author has been successful in introducing the concepts of the present value of an ordinary annuity by using: a formula approach, problems that relate directly to the individual, and a present value of an ordinary annuity table with at least 360 periods and interest rates expressed to facilitate compounding monthly. Several examples follow. Two points about the formula should be stressed. First, the formula contains four variables. If three are known, the fourth can easily be found algebraically. Second, since there are four variables (PVA, i,n, P), the formula can be used to solve four different types of problems.

Abstract This article provides a comparative evaluation of a model of debt phenomena which is more realistic, and more useful for the characterization of debt phenomena, than any available to date. Models which could serve as a good description of debt processes have not been available in the economics and business literature until the appearance of recent work on time series in general and on sales and debt processes. The number of debts incurred during a period may be likened to the number of births during a period. Total debts outstanding corresponds to the total people in the population. The payments of debts has its counterpart in deaths. A capsule comparison with a generalized inflowstock-outflow process would liken the total amount of debts coming into being each period to the water molecules flowing into a barrel, the debts outstanding in stock to the water molecules in the barrel, and the payments of debts to the water molecules flowing from the barrel. A Benishayan time series model was shown to provide a good replica of loan processes.

Abstract This article presents information on evaluating alternative methods of accounting for long-term nonsubsidiary holdings of common stock. Long-term investments by one corporation (investor) in the common stock of another corporation (investee) can be classified in one of two basic categories according to the percentage of the common stock of the investee corporation held by the investor corporation. Holdings of more than 50 percent are classified as subsidiary holdings while holdings of 50 percent or less are classified as nonsubsidiary holdings. Under the cost method, "periodic investor income" consists of dividends received by the investor which are distributed from the investor's proportionate share of undistributed investee earnings accumulated since the acquisition of the investment. The book value of the investment on the investor's books, hereafter referred to as "investment carrying value," is periodically reduced by any dividends received in which distributions in excess of investee earnings since acquisition of the investment. Such dividends are referred to in this paper as "excess dividends." Finally, Opinion 18 states that a senes of operating losses of an investee or other factors may indicate that a decrease in value of the investment has occurred which is other than temporary and should accordingly be recognized.

Abstract Reviews the book "Accounting Measurements for Financial Reports," by William J. Vatter.

Abstract The article presents a study designed to answer whether the attest function has already extended into new areas and whether there is evidence that the attest function will he further extended within the foreseeable future. Specifically, extensions to these areas were considered the internal control system of an entity, the efficacy with which management performs its function, financial data beyond that contained in the financial statements including financial projections, and conformance of operations to pre-determined standards, for example, actual performance to budgeted performance. Articles relevant to extensions of the attest function have tended to focus on the "pros" and "cons" of a specified extension. They have not generally been concerned with the examination of available evidence to determine whether a given extension is actually taking place or can be forecasted. The results of such an examination provide the basis for this paper. There is, with one exception, little evidence to support the contention that the attest function has extended into new areas or will be extended in the near future.

Abstract Reviews the book "How's That Again?," by Roger M. D'Aprix.